Commodity Analysis

Technical View

Gold outlook remains uncertain

Akhil Nallamuth | Updated on June 14, 2020 Published on June 14, 2020

August futures of the yellow metaloscillates between ₹45,000 and ₹47,650

The iCOMDEX composite index of the Multi Commodity Exchange (MCX) was largely flat last week as the price of crude oil weakened and that of gold went up. Crude oil and gold together contribute about half of the index’s weight. In forthcoming sessions, the index could rise as a result of a rally in crude price.

MCX-Crude (₹2,738)

The June futures contract of crude oil in MCX declined last week as it faced a resistance band between ₹2,950 and ₹3,000. But the contract took support of the 21-day moving average (DMA) and closed above the important support of ₹2,570. Until the price stays above that level, the likelihood of a rally is high.

As the price moderated last week, the daily relative strength index (RSI) took a downward path; yet, it lies above the midpoint level of 50. But the moving average convergence divergence (MACD) indicator in the daily chart, which is in the positive region, is exhibiting weakness as the trajectory is turning downward.

Since the contract is trading above the support at ₹2,570, traders can buy the contract on declines with a stop-loss at ₹2,500. On the upside, it is likely to rally towards the resistance band between ₹2,950 and ₹3,000. Above these levels, the resistance is at ₹3,240.

MCX-Gold (₹47,334)

The August futures contract of gold in MCX advanced last week, taking support of the 50-DMA.

However, the contract remains within ₹45,000 and ₹47,650, and until either of these levels are breached, the next price swing will be uncertain. The price has been oscillating within the range since the beginning of April.

The daily RSI is showing a fresh uptick and stays above the midpoint level of 50. The MACD indicator in the daily chart, which has been in a downward trajectory, is turning upwards. These are bullish indications.

But ₹47,650 is a strong resistance and so traders can go long on the contract if it breaks out of that level. The stop-loss can be at ₹46,000. A breakout of ₹47,650 can attract considerable buying interest, potentially taking the contract to ₹50,000.

MCX-Silver (₹47,690)

The July futures contract of silver in MCX was sluggish last week as it was moving in a narrow sideways trend. The contract remains within two important levels of ₹47,000 and ₹50,000.

In the daily chart, a head-and-shoulder pattern can be observed with its neck level at ₹47,000 — an indication of bearish trend-reversal. Hence, a break below ₹47,000 will confirm the pattern, resulting in a considerable downtrend.

The RSI and the MACD indicator in the daily chart are showing bearish bias. While the RSI is forming lower highs and lower lows, the MACD has been in a downward trajectory.

Though there are bearish indications, traders can hold back fresh short positions until the support at ₹47,000 is breached.

Below that level, the contract can be dragged to ₹45,000. But if the contract bounces off ₹47,000, it might rally to ₹50,000.

MCX-Copper (₹443.3)

Extending the rally, the June futures contract of copper in MCX appreciated last week when it broke out of the resistance at ₹440 and registered an intra-week high of ₹451.2, before ending the week at ₹443.3. The contract is in a strong bullish momentum and likely to advance further from current levels.

Corroborating the upward bias, the daily RSI has been rising in tandem with the price; also, it remains above the midpoint level of 50. The MACD indicator in the daily chart is also in the positive territory.

Even as the contract is on a strong uptrend, ₹450 can be a substantial roadblock for the bulls.

Hence, traders can initiate fresh long positions above ₹450 with a stop-loss at ₹440. The contract might rally to ₹460.

NCDEX-Soybean (₹3,776)

The price of July futures contract of soyabean in the National Commodities and Derivatives Exchange (NCDEX) fell last week after having rallied in the preceding week.

Nonetheless, the contract can be inclined towards an uptrend as long as it remains above the support of ₹3,700.

While the daily RSI is hovering in the neutral region, the MACD in the daily chart is in the positive territory. Since the likelihood of a rally is high until the price is above ₹3,700, one can be bullish on the contract.

Traders can either go long with a stop-loss at ₹3,600 if the price softens to ₹3,700 or go long with a stop-loss at ₹3,800 if the price decisively rallies past the resistance at ₹3,900. Above ₹3,900, the contract might rally to ₹4,000 and ₹4,050.

Published on June 14, 2020

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